Commercial Energy Performance Certificates
In an attempt to address the EU’s Kyoto commitment to make significant cuts in greenhouse gas emissions by 2012, it will soon be a legal requirement that all commercial buildings are rated for energy efficiency, with very few exceptions. If targets are met, statistics suggest around 20% (100 million tonnes) of carbon dioxide will be saved each year.
Implementation of these new regulations takes the form of energy performance certificates (EPCs). Currently, home information packs (HIPs) for residential properties require EPCs to be produced when buildings are constructed, sold or rented out. However, since April, a number of changes have already started to affect commercial properties.
From April, buildings with a floor area over 10,000 square meters were required to produce an EPC. From July, this applied to buildings with a floor area of over 2,500 square meters. From this October, they will be required on the construction, sale or letting of all commercial buildings. In addition, all public buildings with a floor area of over 1,000 square meters will be required to show a display energy certificate (DEC) which will require annual renewal and regular inspections.
EPCs are a measure of the energy efficiency of a building and are similar to those found on some kitchen appliances. Buildings will be allocated a grading from A (most efficient) to G (least efficient) based on several factors including ventilation, heating and air-conditioning facilities. An advisory report will also be provided with recommendations for improvement but there is no legal requirement to carry out any of these recommendations at present. Once produced, an EPC is valid for ten years.
The responsibility for producing an EPC currently lies with the owner or landlord who must make the certificate available to any prospective buyer or tenant before entering into any contract to sell or rent the building. It is therefore necessary that the EPC is available before the building is advertised or marketed. It will only be possible in limited circumstances to pass the cost of this responsibility onto a third party.
The cost of non-compliance with the regulations is high, and varies from £500-£5,000. It is based on 12.5% of the rateable value subject to a cap. There are separate penalties for failure to comply with the air conditioning inspections.
A specially-qualified Energy Assessor will inspect and produce accredited certificates. It is not yet clear whether there will be a sufficient number of qualified assessors and we would suggest you look into this sooner rather than later. Every EPC must also be registered on a national database.
The certificates are estimated to cost between £1,000 for small commercial premises and £5,000 for larger buildings but could be up to £20,000 for large shopping centres and other big estates (the cost is based on about £0.50/sq metre).
Due to the potentially high fees in producing an EPC, it will help keep costs to a minimum if you provide as much information as possible to the Energy Assessor in advance including detailed layout plans, details of glazing installed, the type of heating system and the fuel used.
Major property developers are already incorporating more eco-friendly features in commercial buildings, but the vast majority of commercial property owners have not yet grasped the enormity of what will happen. Even experienced landlords should be aware that there will be more complex requirements surrounding the common parts of a building and these may well be subject to independent certification with a requirement for a number of EPCs for different units within a large mixed-use building.
Companies with a strong sense of corporate social responsibility are attracted to the idea of greener buildings, especially in today’s financial climate. There are an increasing number of landlords wanting to improve their EPC ratings and with rising energy costs, better energy performers may attract a market premium. Whatever your motive, one thing is clear - you need to address this issue now and be prepared.
To contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Alternatively you can email Jo - jo.thirsk@raworths.co.uk.
